A new crop of green banks sprouting

In recent months, investor groups in Illinois and Pennsylvania have gotten regulatory approval to open GreenChoice Bank in Chicago and e3bank in Malvern, Pa., joining New Resource Bank in San Francisco, Green Bank in Houston and First Green Bank in Eustis, Fla.

The banks are marketing Earth-friendly policies such as lower interest rates on loans to green builders and borrowers who buy fuel-efficient cars, as well as incentives to depositors who opt out of paper statements.

Consumer services, including banking, is a hot segment for the green movement, according to research firm Mintel. A Mintel survey found that 56 percent of respondents find paperless accounts to be ecologically friendly, not just a cost-cutting ploy.

With bank failures on the rise and the economy in turmoil, GreenChoice Bank, aspires to be one of the Midwest's first green lenders.

"Sustainability has entered the mainstream, as evidenced by the ubiquity of 'green' messaging and reporting in the media," said GreenChoice's application with the Office of Thrift Supervision.

Steve Sherman, who will be GreenChoice's chief operating officer, is accredited in green building practices by Leadership in Energy and Environmental Design, or LEED.

On June 2, GreenChoice received conditional regulatory approval, and it hopes to raise $13.5 million to $16 million in capital. GreenChoice expects to provide better terms for, say, a green builder, or a higher rate for consumers who opt out of receiving paper statements. The differential hasn't been set.

It'll also be pushing envelope-free ATMs and remote deposit capture, in which a business customer can deposit checks without visiting a bank. First Green Bank, which opened in February, offers zero-interest loans to workers who buy cars that get more than 30 miles a gallon.

A campaign to raise at least $20 million in capital at e3bank will be partly conducted online. The three e's in its name stand for environment, economy and social equity.

Redstone Bank, which was renamed Green Bank in 2007, emphasizes home-efficiency projects. For example, a green home-improvement loan with a principal of at least $200,000 will receive annual rewards of $500. The bank's Web site outlines required improvements, including water-saving dual-flush toilets.

Green Bank Chief Executive Geoffrey Greenwade noted that there are fewer delinquencies on green banking products because borrowers "tend to be higher income and better educated" and are "a little better at paying bills."

"These have averaged around $800,000, with a quarter of a percent discount from the current interest rate," Greenwade said. "We recently approved a $2 million home construction loan" expected to have green elements.

In April, New Resource Bank, which opened in 2006 claiming to be the nation's first green bank, was ordered by the Federal Deposit Insurance Corp. to reduce its level of bad loans, take a more critical look at construction projects it underwrote and improve its management.

In May, New Resource told the Los Angeles Times that it faced challenges in working through problem construction loans made before the economy soured, including funding energy-efficient condominiums aimed at entry-level homeowners.

Traditional banks such as Chase, Harris and Bank of America offer numerous green products and services. And others are getting nudged along.

Little Green Tree House soon will open an environmentally friendly day-care center, financed partly by a $1 million-plus loan from PrivateBank, a traditional lender.

"The prospect of being green is a whole new ballgame because it's more expensive to do things," said Elizabeth Geldhof, business operations director. "We had to push them a little bit."